There is considerable evidence indicating individuals are highly impatient. In particular, they exhibit higher discount rates in the short run than in the long run (Frederick et al., 2002). This result has significant implications for how we model intertemporal decisionmaking (Strotz, 1955–56). In most of the experiments, short-term discount rates are measured using monetary rewards delivered a...

This paper investigates the coordination mechanism for a supply chain with one manufacturer and two competing retailers when the demands are disrupted. This differs from conventional supply chain coordination models under a static case. We will consider different scenarios of the problem: the production deviation cost may be either incurred to the manufacturer or to the retailers; the supply ch...

Previous research on numerosity effects has shown that people often infer higher quantity from larger numbers (i.e. specified in smaller units). We argue that consumers have default units for many attribute levels. In three studies, we demonstrate that products described in default units generate more positive product evaluations, irrespective of the nominal value of the attribute (Study 1). Th...

Intertemporal preferences are di¢ cult to measure. We estimate time preferences using a structural bu¤er stock consumption model and the Method of Simulated Moments. The model includes stochastic labor income, liquidity constraints, child and adult dependents, liquid and illiquid assets, revolving credit, retirement, and discount functions that allow short-run and longrun discount rates to di¤e...

In this article we develop alternative ways to compare asset pricing models when it is understood that their implied stochastic discount factors do not price all portfolios correctly. Unlike comparisons based on x2 statistics associated with null hypotheses that models are correct, our measures of model performance do not reward variability of discount factor proxies. One of our measures is des...

The objective of this paper is to adopt a general equilibrium model and determine the socially e¢ cient discount factor, risk free rate and discount rate when there are heterogeneous anticipations about the growth of the economy as well as heterogeneous time preference rates. Among others we tackle the following questions. Is the socially e¢ cient discount factor an arithmetic average of the in...

In general terms, decreasing impatience means decreasing discount rates. This property has been usually referred to as hyperbolic discounting, although there are other discount functions which also exhibit decreasing discount rates. This paper focuses on the measurement of the impatience associated with a discount function with the aim of establishing a methodology to compare this characteristi...

This article considers a new concept of social optimum for an economy populated by agents with heterogeneous discount factors. It is based upon an approach that constrains decision rules to be temporally consistent: these are stationary and unequivocally ruled by the state variable. For agents who differ only in their discount factors and have equal weights in the planner’s objective, the tempo...

gent claims. The ~wo factors are the instantaneous riskless (short-term) interest rate and the instantaneous variance of changes in this short-term interest rate. The model is attractive not only because it provides for closed form expressions in a two-factor world. but also because it explicitly allows for a stochastic volatility f.lctOr. As the parameters of the model can be estimated using b...